Multiple Choice
What is the effective annual interest rate (EAR) on a 9\% APR automobile loan that has monthly payments?
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1. Introduction to Accounting
Useful Information
Multiple Choice
Which of the following statements about the Federal Deposit Insurance Corporation (FDIC) is true?
A
The FDIC is a private corporation owned by major U.S. banks.
B
The FDIC insures deposits at most commercial banks up to a specified limit per depositor.
C
The FDIC guarantees unlimited insurance coverage for all depositors.
D
The FDIC was created to regulate the stock market.
Verified step by step guidance1
Step 1: Understand the role of the Federal Deposit Insurance Corporation (FDIC). The FDIC is a government agency established in 1933 to protect depositors and maintain public confidence in the banking system.
Step 2: Clarify the FDIC's primary function. The FDIC insures deposits at most commercial banks and savings institutions up to a specified limit per depositor, which is currently \$250,000 per depositor, per insured bank, for each account ownership category.
Step 3: Eliminate incorrect statements. The FDIC is not a private corporation owned by major U.S. banks; it is a government entity. It does not guarantee unlimited insurance coverage for all depositors, as there is a specific limit. Additionally, the FDIC was not created to regulate the stock market; its focus is on the banking system.
Step 4: Identify the correct statement. Based on the FDIC's role and functions, the correct statement is: 'The FDIC insures deposits at most commercial banks up to a specified limit per depositor.'
Step 5: Review the importance of FDIC insurance. FDIC insurance provides financial security to depositors by protecting their funds in the event of a bank failure, thereby promoting stability in the financial system.
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